The first hangovers of the new electric vehicle economy are setting in, and Tesla has released a set of figures pointing at a slump in sales exacerbated by the end of the federal EV tax credit and slowing interest in its models against newer competition.

Tesla reported 418,227 deliveries in the fourth quarter of 2025 and 1,636,129 for the year. The Q4 figures are off by about 16% from the third quarter, and final deliveries slowed an estimated 9% over all of 2024. 

The Model 3 and Model Y Standard models were revealed in the fall and failed to curb the slowdown in sales of the company’s cars as early as last month. Combined with a year-long sharp drop in sales in Europe, Tesla had a tough year. The Standard versions are still being advertised with 0% financing for up to 72 months on the Tesla website, some of the most generous incentives by any automaker in the U.S. in December, Tyson Jominy, senior vice president of data and analytics at J.D. Power, told Gizmodo.

According to The New York Times, Tesla is expected to be outsold in 2025 by China’s BYD for EV sales as that automaker finds favor in regions that Tesla once held as strongholds. And momentum for gas-electric hybrids could be growing as Lexus reports record sales in the U.S. for its hybrid SUV lineup, according to Bloomberg. 

BYD has ramped up its efforts in countries outside of its EVs amid softening demand. While the company reported slower sales in the fourth quarter, it will still comfortably exceed Tesla’s China sales alone for 2025 and pass Tesla as the largest EV automaker, encroaching on its stronghold markets under political pressure.

We’re still waiting on more data to get a better picture of how the end of the EV tax credit is hurting the overall industry. Most automakers will report total U.S. auto sales next week and give financial reports in late January or early February. Companies are predicting steep drops in EV sales and are prepared to pivot to hybrid models, which benefits Toyota, Lexus, and other brands with deep hybrid lineups.

The Sept. 30 end of the federal tax credit for new and used EVs pushed sales of both up in the months ahead of the deadline, and automakers changed their plans for new vehicle releases ahead of anticipated slower demand during the end of 2025 and in the early months of 2026.

On Dec. 29, Tesla issued a consensus on delivery estimates for 2025 through 2029 based on Wall Street analysis from firms including Barclays, Wells Fargo, UBS, and Evercore. Those estimates indicated that deliveries would rise from roughly 1.64 million in 2025 to more than 3 million in 2029, including the Model 3 and Y and “other models,” which could include the Model S, Model Y, Cybertruck, Semi, Roadster, and Cybercab—all of which comprise around 5% of deliveries in 2025.

Tesla said on Friday that it will report its fourth quarter and full 2025 financial report on January 28. It remains to be seen how the company will turn its automaking business into a positive in a different economic climate.